1989 (6) TMI 208 - AT - Central Excise

Summary

Issues Involved:

1. Classification of products Bituman Supplement Neftin-50 and Neftin-200 under Tariff Item 14E or 68 of the Central Excise Tariff (CET).
2. Eligibility of the products for the benefit of Notification No. 6/84 dated 15-2-1984 if classified under Tariff Item 68.

Issue No. 1: Classification under Tariff Item 14E or 68

The primary issue is whether the products Bituman Supplement Neftin-50 and Neftin-200 are patent or proprietary medicines under Tariff Item 14E or should be classified under Tariff Item 68. The Assistant Collector, in de novo proceedings, held these products liable to duty under Tariff Item 14E, denying the benefit of Notification 6/84. The respondent company contended that these products are animal feed supplements for the proper growth of chicks/birds and improving feed conversion efficiency. The Collector (Appeals) ruled that the products are not classifiable under Tariff Item 14E and are eligible for the benefit of Notification 6/84, classifying them as animal feed supplements based on trade understanding and commercial parlance.

The appellant Collector argued that the products contain medicinal ingredients conforming to the B.P. standard, used for treatment or prevention of diseases in birds, and therefore, satisfy the definition of patent or proprietary medicine under Item 14E. The respondent company countered that the products are used in micro quantities and do not have therapeutic effects, asserting that the products should be classified based on trade understanding.

The Tribunal, after considering the Supreme Court's pronouncements in relevant cases, concluded that the products fall under Item 14E of CET. The products are for the treatment or prevention of ailments in animals and carry brand names, satisfying the definition of patent or proprietary medicine under Tariff Item 14E. The Tribunal emphasized that the classification should be based on the statutory definition rather than trade or commercial understanding.

Issue No. 2: Eligibility for Notification No. 6/84

Assuming the products fall under Tariff Item 68, the issue is whether they qualify for the benefit of Notification No. 6/84, which exempts animal feed supplements. The department contended that the products do not satisfy the conditions of being added to the basic feed mix, fulfilling specific needs, being used in micro quantities, and requiring careful handling and mixing. The respondent company argued that the products are to be added to the basic feed mix at the time of preparation, not at the time of clearance from the factory.

The Tribunal, agreeing with the respondent company, held that the definition of animal feed supplement does not require the products to be mixed with the basic feed at the time of clearance. The products can be mixed subsequently at the time of preparing the ration for animals. Therefore, if classified under Item 68, the products would be entitled to the benefit of Notification 6/84.

Conclusion

The Tribunal allowed the department's appeal, set aside the impugned order, and restored the order of the Assistant Collector, classifying the products under Tariff Item 14E with consequential liability of duty. The Tribunal clarified that the scope of the present Tariff was not considered as the issue pertained to a period before the introduction of the present Tariff w.e.f. 28-2-1986.